Communications in Organization

Concept & Types of Organizations with Reference to the Behavioral Theory
People function in society as individuals and in organized groups, such as family, clan, school, community, professional associations, trade unions, etc.
Organization, according to one of the meanings given in the Oxford Dictionary, is an organized body of people; an organized system.
Just like an organism (a living being, an individual animal or plant), it is an individual entity functioning as a unit. Examples: Telikom, Microsoft, Netscape, The National, Pepsi, Coca-Cola, the Government, the military, the air force, the navy, etc.
Just like an organ (a distinct part of an animal or plant body, adapted for a particular function, i.e., digestive organs) in the larger body of human society, every organization carries out a specific function - be it educational, business, government or religious. To make our analogy more vivid, individuals are like single cells in the body of human society, whereas organizations are like organs with their specific functions.
The Behavioral Theory identifies four levels of communication in the human society, or four main types of communication networks:

• Intrapersonal
• Interpersonal
• Group interaction and
• Cultural.

Communication in organizations may occur on all four levels.
Communication in Business Organizations
Business organizations are established to achieve a specific purpose, such as the production of some goods or services. Effective communication is vital for the coordinated functioning of any organization.
There are the two main contexts in which organizational communication may be viewed: internal and external communication.
Internal communication involves all communication networks within the organization, i.e. between the various levels of the hierarchy, departments, branches, or individuals.
The main internal communication channels include:

• Written - memos, reports, forms, notice boards, house magazines, manuals
• Oral - interviews, consultations, formal and informal meetings, grapevine.
• Telecommunications - telephones, intercoms, private lines, fax, computers, email, etc.

External organizational communication entails all communication by the organization with the general public, or other public or business organizations. External communication purposes vary from public relations and image-building to governmental, educational, environmental, etc.
The channels of external communication include the mass media, advertising, letters, company reports, open days, local/community participation, sponsorship, trade fairs and exhibitions, conferences, etc.
Internal communication in all organizations has formal and informal channels of communication.
Levels of Business Communication: There are four levels of communication in organizations:

1. intrapersonal (communication with yourself)
2. interpersonal (communication to a superior or subordinate)
3. one to many (making a speech)
4. many to one (a committee making a presentation to company president, etc.)

Functions of Communication in a Business Organization
The major functions of communication in a business organization include communication for

• Information - passing information between people working in the same organization and between the organization and others
• Control - communication (written, oral, or even nonverbal) is also used as part of management control for the planning of operations, evaluating performance, directing and motivating staff.
• Motivation - The difficulty is for the managers to find a balance between control and motivation and efficiency. Too much control may reduce initiative and actually lead to a lower productivity with less response to what the customer wants and more emphasis on what the workers think the management wants

Increased Volume and Complexity of Communication in Organizations
We know how complex the process of communication is between two parties (See Lecture 1). The complexity of internal communication systems and information flow increases with the growth of the administrative and clerical functions and the size of organizations. In a small organization with perhaps only 6 or 7 staff, all in one room, communication is simple and straightforward, with people talking face to face to one another. There is no need to send innumerable memos or use the telephone.
As soon as the organization expands, so does the communication system. More written communication is needed, more specialized information is needed, even the same information will need to be communicated in different ways to different groups.
Advances in telecommunications technology have significantly expanded our options for communicating, but they have not solved the communication problem at work. It has always been difficult to get the right information to the right people at the right time - and it still is. In fact, one can make a persuasive case that the rate of change and the rapid growth of information are making this age-old challenge more difficult than ever.
In view of the large volume and increased complexity of communication within organizations, the need arises to effectively select, control, and direct the flow of vital information.
This is achieved with the help of formal organizational structure.
Organizational Structure & Lines of Communication
Business organizations consist of people who work together to achieve common goals (at least in theory! :). Organizations are the system by which individuals cooperate, so that there can be specialization of functions and skills for greater efficiency. This specialization of functions forms the basis of organizational structure. All organizations, as we know, have formal and informal structure.
The formal structure is deliberately developed to regulate and direct the flow of information and to control other aspects of organizational hierarchy and set-up. In order to select, restrict, direct, and control the flow of communication within the formal organization structure, the traditional organizations employ the sequential model of communication that emphasizes up and down hierarchal communication. Most frequently we designate communication to superiors as upward/vertical communication, messages to subordinates as downward/vertical communication, and communication to those on our level as lateral/horizontal communication. Diagonal communication occurs when there is communication between lower and higher levels of hierarchy, but both in different lines of authority (for example, between senior members of academic staff and junior Bursary officers, etc.). Most traditional organizations also have a policy of communication (protocol) dictating the etiquette (formal standards/rules of correct and polite behavior within the organization) designed to ensure effective communication within the organization.
Informal structures/networks, based on personal relationships, will not appear on any organization chart, but can have as much or more impact on the functioning of the organization as the formal communication system.
For example, here are some of the positive aspects of the informal network:

• It may speed up the communication process: when an employee in one department needs help to complete a task or solve a problem, members of the informal network in other sections can use their authority or power to assist. This avoids the delay of ‘going through the right channels.’
• It may create a conducive working atmosphere, again leading to higher productivity: If the needs and goals of formal management coincide with those of the informal organization, in other words, if staff are well motivated, then the atmosphere of trust between the management and employees will lead to higher productivity.
• It helps to diffuse tensions: Job satisfaction is also related to social environment. The informal network allows employees to ‘let off steam’ with other colleagues, thus diffusing potentially destructive conflicts.
• It provides feedback to the management: If management are sensitive to the ‘grapevine,’ they can obtain information on how employees feel about the organization, the management, and the work.

Some of the possible negative effects of the informal organization:

• It may cause conflict within the formal structure: when the goals of the informal organization differ from those of the formal structure, conflict occurs. If the formal channels of communication are ineffective, rumor and gossip (‘grapevine’) spread like wild fire and may disrupt the work process. Individual perceptions distort information. Rumor is the unsupported or untrue part of the informal communication and is therefore of great disadvantage to the organization.
• The informal organization will tend to resist change: organizational restructuring (downsizing, etc.) that are perceived to threaten the existing structure, will be opposed effectively by a well- formed informal organization.

Every organization has a constantly changing informal communication network that involves the link between individuals and groups outside the formal lines of authority and communication. To deal with it effectively, management should recognize its existence and try to influence its direction. It will do so by being aware of the rumors, replacing rumors with fact, and creating conditions that support the goals of both groups.
Classification of Organizational Structures: Despite the wide diversity of organizational structures, we can classify them according to the following criteria:

• The extent of complexity
• The level of formalization
• The degree of centralization.

The greater the number of individual job functions/titles in an organization, the more complex the structure. The more sections, departments, or divisions in the organization, the more complex a company becomes because there are more levels between the least powerful and senior management.
Complexity: Organizational structures may be tall or flat, depending on the number of levels of management.
Tall structures are typical of large public sector corporations; they are also still found in some large companies. Tall structures are put in place when the management wants to centralize all decision-making and retain control over the whole of the organization.
Flat structures exist in those organizations which have very few levels of management, so that there may be only one or two levels in the hierarchy.
The number of levels, that is, whether the organization is tall or flat, directly affects communication within an organization. The effectiveness of communication will depend on how well managed the organization is, and on the extent of horizontal links.
Formalization: The more an organization determines the job specifications of its employees, the more formalized it is. Low formalization in a job means that the employee has a high degree of independence and discretion in the job. In other words, it means a high degree of control over work. Conversely, high formalization means little control or independence, therefore little power.
Centralization: The communication effectiveness of an organization will also depend on the extent of the centralization of decision-making in the company. Organizations with tall structures tend to be highly centralized: all major decisions there require the approval of top management. This means that middle management is unable to make important decisions and must therefore use memos, short reports, and submissions to request a decision.
Thus, there is an undeniable link between the organizational and communication structure of any concern. This is not the place for a detailed analysis of the link between an organization’s structure and its overall efficiency; however, structure does have a major effect on the communication that takes place. Traditional organizations, operating in a more or less stable environment, tend to be more structured and make greater use of organizational charts, protocol, policies, and job descriptions. Modern organizations, operating in a very dynamic environment, may have no organizational charts, job descriptions, or standing plans; they are highly flexible. The structured organization is called mechanistic, and the flexible structure, organic.
Mechanistic structures:

• are static, rigid, vertically oriented, pyramid shaped
• use rules, policies, procedures
• decision-making is limited to top management
• authority is based on position
• have elaborate control system and
• rigid communication channels.

Mechanistic structures are best used when

• goals are well known and long lasting
• there is a stable, reasonably simple environment
• technology is simple and well understood
• work force appreciates routine, structure, and low levels of ambiguity.

Organic structures:

• are fluid, dynamic, ever changing
• horizontally oriented
• flat
• decision-making takes place at all levels
• changing authority patterns
• authority based on expertise
• collaboration
• informal routes of communication based on current needs.

They are best used when

• tasks are uncertain
• environment is complex and ever changing
• technology is complex and constantly changing
• workforce is creative and innovative.

Communication in a “Network” Organization: Facing New Realities. Leadership (management) has generally been considered the province of the CEO (Central Executive Officers), or at best, a few people at the top of the organizational hierarchy. “Command and control” leadership/management carried many organizations to very high levels of financial performance during periods when competition was not so great and things did not change very fast - but its time has passed. It is becoming clear that no small group at the top can provide the leadership needed for an entire organization of any size in the information age. The demands on the total organization are too great for a few people at the top to call all the shots.
Today, better-informed customers, rapid change, and fierce competition from global competitors demand empowered employees exercising leadership at every level of the organization. This is not possible without a radical restructuring of the traditional sequential model of organizational communication. As mentioned earlier, there have been three pervasive patterns that will no longer work in knowledge-based organizations:

1. the primary flow of information was vertical - within departmental walls that were often impermeable,
2. information was hoarded and used as a source of power over others, and
3. people at the top often withheld crucial strategic information from those lower in the organization in the belief they couldn’t handle it.

The restrictive and regulatory function of the traditional sequential model of communication is no longer effective in ensuring the timely delivery of the right kind of information to the right people at all levels of the modern organization. Because vertical communication is bound by hierarchy and function, communication is constrained, lacking integration across function. The sequential model restricts innovation and prevents organizations from making effective use of information resources. A new, concurrent communication model is evolving - it is goal oriented and emphasizes an interactive process that supports simultaneous and spontaneous communication. Since communication is a critical element in organizational design, a new type of ‘network’ organization is evolving, with formal and informal interactive communication structures at all units and levels. As the environment becomes more dynamic, the general trend is for organizations to move from the mechanistic structure to organic structure in order to remain competitive.
Channels of Communication and Networking. Types of Networks. When we communicate with those above us, below us, or around us, we are establishing communication networks. These may be formal channels or informal channels.
Within the organization, there are usually four types of networks:

• Wheel: a wheel network exists when there is a supervisor with a number of subordinates reporting directly without consultation or links with each other.
• Chain, in a chain communication network information is passed sequentially to the next employee above or below in the line of authority.
• Circle, the circle is a three level hierarchy with the lowest level of employees communicating with each other and directly with the person on the next level. That level then reports directly to the higher level. Communication also occurs downwards between the levels.
• Star, or the all channel network, is more an ideal than a reality, every member of the organization is able to communicate directly as an equal with every other member. Some committees are examples of all channel (star) networks.

The most structured is the wheel; the least structured is the star, where opportunities for feedback are greatest and morale is usually the highest.
Communication Media in Business Communication
Both formal and informal channels of communication may employ four major media of communication.

• face-to-face communication (formal meetings, interviews, informal contact, the grapevine),
• oral communication (the telephone, the intercom or public address system),
• written communication (letters, memos, reports, forms, notice boards, bulletins, newsletters, organizational manuals, etc.),
• visual communication (charts, films, slides, photos, etc.).

Principles of Business Communication
There are eleven principles of business communication.

1. Conciseness. Most business people are very busy (time is money!). The wordy letter is usually put aside, for its very wordiness makes comprehension difficult.
2. Completeness. Your communication must contain all necessary information. Having to request information that should have been included will probably antagonize the recipient of the communication.
3. Courtesy.
4. Correctness. Everyone has a tendency to focus on errors. To many people, errors in spelling, price quotations, sentence structure, and the like are a reflection of organizational inefficiency.
5. Clarity. All ambiguity should be avoided.
6. Logical Organization. It is one of the keys to all effective communication.
7. Attractiveness. All business communication should ‘look good’. Appearance is also important in face-to-face communication.
8. Natural tone. The tone of business communication should be friendly, natural, and sincere. Hackneyed, archaic, and obsolete words, phrases and expressions should be avoided.
9. Tact. Controversial expressions that might antagonize or embarrass the ‘receiver’ should be avoided. At times it is necessary to convey unpleasant ideas, but the choice of words used to accomplish that objective should permit the ‘receiver’ to save face and accept the idea.
10. Positive tone. A positive tone almost invariably evokes a positive reaction. In almost every situation, it is more desirable to make a positive statement. On rare occasions you may wish to convey a negative idea or problem. However, you should almost always follow immediately with an offer of a positive solution.
11. ‘Receiver’ orientation. An effective communicator must be sensitive to the reactions and anticipated responses of the ‘receiver(s)’.

Introduction to Business Communication

The focus on the principles and conventions of business communication will also help us improve our basic interpersonal communication skills, such as reading, writing, listening, and speaking. The all-important role of analytical thinking as the underlying factor in any form of effective communication will be highlighted.

Definition of Communication. Communication is a complex process often involving reading, writing, speaking and listening. It may be verbal and non-verbal (or a mixture of both), and it uses a variety of media (language, mass media, digital technology, etc.). Broadly speaking, communication is a transfer and reconstruction of information. More specifically, we may define communication as the transmission and reception of ideas, feelings and attitudes — verbal and non-verbal — that produce a response.

Brand Dynamics

Introduction
With the understanding of measures on the first two dimensions, that is, differentiation and relevance, this lecture continues with the discussion on measures of variants of the remaining two dimensions, esteem and knowledge.

On the dimension of esteem
Customer loyalty: This shows how consistent customers are in buying your brand, how long they have been buying and how long they may buy? This measure should tell you the number of customers that you would have lost had you not had the branding strategies. This also tells you that the customers who did not leave your brand are loyal customers.
You ask your customers what other brands they considered before finally deciding to stick to your brand. You can find out the competitive brands that entered your customers’ decision-set. The next question should clarify why they stuck to your brand after considering competition and then discarding it.

Tips for Successful Brand Management

The internet has changed the way that companies present themselves to the masses, whether or not they actually have web properties to manage. Every time a company does something bad it seems to find its way online. Managing perception among internet users is nearly impossible because once something gets out, it has a tendency to spread like wildfire.

Letting Followers Do the Talking

Generating regular content for web properties is difficult. Coming up with new things to say on a consistent basis is harder than it looks. Rather than force out updates, the following that a web property garners can do all the talking. Word-of-mouth advertising is one of the most effective ways to promote a company. Good or bad, let them say what they have to say. Positive feedback in this arena can do more for a business than pretty much anything.

Branding in the Age of Information and Internet

The Emerging Millennial Consumers and Ways of Reaching out to Them
With the advent of the internet and the coming of Web 2.0 and mobile driven browsing, marketers all over the world are realizing and recognizing the importance of using the online medium for branding their products. The new generation of consumers and especially the Millennials or those born after the late 1970s and especially those born in the 1990s and later have a propensity to transact online which means that marketers and companies do need to brand their products in the virtual world if they are to target this demographic. Further, with the advent of Smartphones and their widespread usage by the Millennials, branding of products online and in the mobile world is no longer a luxury but a necessity owing to the changing shopping habits of the emerging consumers. This is the reason why many brands are being marketed aggressively in the online realm so that they do not miss this consumer base. For instance, brands like Nike, Adidas, Coke, Pepsi, and GAP that have long had a significant outdoor and print media driven branding strategy have now jumped into the online branding effort as a means of reaching out to this consumer base.

Brand Management Challenges

Last few decades have changed our world beyond recognition. There has been unprecedented progress in all spheres of life. Technology and scientific advancement has played major role affecting all parts of the economy, politics as well as markets. With globalization and opening of markets we see a sea of changing in the way business is conducted and organizations are structured. Global and open markets have changed the structure of consumer economy. The financial mechanisms that aid in trade and consumer buying too have impacted the consumer’s buying habits. Online trading and buying, online payments, mobile banking etc have empowered the customers to make their choices and buying decisions at their discretion.

Marketer’s job has always been very challenging, but the complexities that they face in the market today are different from the earlier times. With markets opening up the competition from ‘Me Too’ brands have increased considerably. Brands face competition from local brands as well as foreign brands and generic products as well.

Marketing Career Option

Sales and Marketing career is highly rewarding both in terms of rewards as well as knowledge and experience. There are many facets to marketing and selling apart from having to focus only on selling the product. Those who have a flare for meeting people and selling products or services will find it rewarding to build a sales plan, identify sales lead, build a pipeline of prospects and converting them as sales. To such salesmen, the sales figures and every new customer account counts. Then there are those who enjoy building marketing strategies, growing the brand and using their creative skills into building effective communication and advertising plans.

Building brands and delivering value to the customers is one of the most interesting jobs that you can enjoy in marketing. Think of all the brands that come to your mind. We associate products with the image of the brand or the logo. Take the case of cosmetics; you will immediately recall some of the well known global brands like Loreal, Olay, Nivea etc. Think of laptops and the logos of IBM and Dell flash in your mind’s eyes.

Apple and Microsoft brands are known to even little children today. Aren’t we all very familiar with the brand logos of Wallmart, Ikea, Tesco, Home Depot and Target etc?. Think of banking and you will immediately recall HSBC, Citibank and Standard chartered or Bank of America etc that you are familiar with. Which airline comes to your mind when you think of planning your travel? You will naturally remember British Airways, Luftansa and Singapore airlines etc logos of which have been etched in your memories.

There is more to brands than just the visual image or the logos. Yes it is true that the logo is perhaps the most important identity of the brand and communicates with the customer. However ask the marketing and branding specialists and they will tell you a whole lot about branding.

Powerful brands build a lot of value to the Company apart from the core value that it delivers in terms of the product or service. Though marketers focus on building the brand and associating it with the product line, the successful brands yield recognition as well as the value proposition to the Organization as well.

Successful brands help to establish a relationship with the customer. Customer can be loyal to a particular brand for their lifetime. It is not uncommon to find people using Kelloggs at home all the time or banking with Citibank because they have been associated with the brands for a long time.

In building a brand and delivering a value proposition through the brand, it is not only the marketing who are involved, but the entire Organization too. When the people have begun to relate to the brand and the Organization through the brand, it becomes imperative that the Organization focus on delivering incremental value consistently through the brand. This then becomes a continuous process. Over a period of time, the brand value and promise including the characteristics, the visual logo as well as the product offering needs to be changed keeping in line with the markets as well as the Organizational strategy for growth and direction.

At all times, the brand image should be relevant to the current times and yet futuristic as well. As the brand communicates to the customer, it becomes a powerful tool that needs to be managed consciously by the Organization.

Brand Architecture

Brand architecture is the structure of brands within an organizational entity. It is the way in which the brands within a company’s portfolio are related to, and differentiated from, one another. The architecture should define the different leagues of branding within the organization; how the corporate brand and sub-brands relate to and support each other; and how the sub-brands reflect or reinforce the core purpose of the corporate brand to which they belong. Often, decisions about Brand Architecture are concerned with how to manage a parent brand, and a family of sub-brands - Managing brand architecture to maximize shareholder value can often include using brand valuation model techniques.

Brand Categories

Every marketing management student would have heard the story about origin of branding, that it was initially used to identify and isolate a particular stock of cattle in the west. From the Wild West, branding as a concept has grown and changed beyond its original purpose. Today brands have become the common tool for us to differentiate and recall various products and services.

Branding in the current times is not limited to products and services alone. In fact you will find every type of organization and business stream using brand as a tool for differentiation, recall and identity. The fact that the brand identity that includes the visual logo also comprises of and represents a particular set of characteristics, values and the core culture of the brand owner. Branding is today used for a lot many purposes other than just to offer products and services to the consumers.

Brand Portfolio

Introduction
Due to limitations of line and brand extensions, companies have to go for a portfolio of brands. Portfolios offer advantages. At the same time, they also are not without disadvantages. The lecture discusses both.

Brand portfolio and segmentation
Every market can be segmented by product, customer expectation, or the type of customers. A chain of hotels may like to have its presence in different segments of the hotel market by having three-, four-, and five-star hotels. Its presence in three different segments addresses different needs of customers within those segments.
Customers in the three-star segment are economy-oriented audience interested in neat accommodation with no frills at affordable pricing in a middle class area of town.

Brand Extension

Introduction
With an understanding developed on positioning, this lecture takes us into the area of brand extension. Although loosely used, the term brand extension comprises of two sub areas - line extension and brand extension. The latter is generally used in all situations of extensions, diversifications, or stretch. We have to draw a distinction between the two for a clear understanding of the concepts.

Concept of positioning clarifies that not one position can satisfy all the varying needs within the category. Different needs have to be identified toward their fulfillment. To keep up with the evolution you have to evolve new points of difference. Different needs refer to different segments and every product has its variants to address to those segmental needs. This holds true for consumer consumables as well as consumer durables. Regular and mild cigarettes, regular and fruit yogurt, regular and high fiber cereals, regular and low cholesterol margarine, and economy and executive models in cars are all examples of product variants in different segments and categories.
To let the market know that you have something different to offer, you must differentiate between the existing offering and the new entry. For the new entry meant to address a different need, you must create a different image reflecting the new promise and must have an evolved contract in place. You do that in either of the two ways:

Brand Equity and Customer Equity

Brand Equity is the value and strength of the Brand that decides its worth. It can also be defined as the differential impact of brand knowledge on consumers response to the Brand Marketing. Brand Equity exists as a function of consumer choice in the market place. The concept of Brand Equity comes into existence when consumer makes a choice of a product or a service. It occurs when the consumer is familiar with the brand and holds some favourable positive strong and distinctive brand associations in the memory.

Brand Equity can be determined by measuring:

Brand Contract

The concept of brand contract revolves around brand’s ability to always stay up to the expectations of consumers. Owing to the associations developed with the brands of their choice, consumers do not want to see those brands deviate from the strong impressions and image they have about those brands.
What consumers expect of brands is a positive change and development in relation to changing technologies, environment, and any other factors that may have a bearing on consumer behavior. To continually remain in favor of consumers, brands uphold consumers’ franchise by remaining up-to-date. This is the only way for brands to remain relevant.
For brands staying contemporary means bringing about innovations and living up to consumers’ likes and expectations. This further means engaging into a “contract”. In other words, brands must respect the contract, attract customers and assume all implications, which they do through fulfilling the promises.
Brands make promises with the customers by providing benefits and developing associations. Any deviations - lowering of quality, non-availability of brands at the point of customers’ choice, or not keeping pace with changing technologies - amount to not keeping the promise and hence in customers’ perception breaching the “contract”. The contract, as such, is not legal; it is purely economic and emotional in nature.

Brand Value and its Measurement

Branding has emerged as a corporate strategy in the recent times. All business organizations in all sectors have embraced the strategy of building their identity through their corporate brands besides the product related brands. Branding is definitely a marketing strategy. However the strategy of investing into brand building and managing the reputation of the corporate brand goes beyond marketing. Branding is considered to be a strategy that is driven and managed by the CEO or the organization along with the senior management as well as marketing heads. Over the recent years, we see new concepts of brand value, brand power and brand equity etc. being coined and measured.

If marketing professionals found it difficult to justify and obtain sanctions for the brand promotional activity, today they no longer need to worry. Brand value and expenses towards brand building have become an accepted part of the balance sheet. Capitalizing the brand value and the expenses towards meeting the brand promotion are budgeted and accounted for in the balance sheets and in many cases the ROI of a brand is also calculated to reflect the brand value status over time.

Brand management has gained prominence in recent times. The fact that we have global brands that have been well established for over fifty years goes on to prove the fact that brands certainly have the power to make or break in the markets. Goodyear, Coco Cola, Gillette, Nestle, Kelloggs, Schweppes, Brooke bond etc have been around for a very long time and have gained certain brand power to drive growth through brand reputation and relationship with the consumers.

Marketers have realized the growing power of brands and have begun to nurture the brand image and cultivate value through brand ambassadors. Most of the lifestyle and luxury brands globally and locally have well known actors and sports persons etc as brand ambassadors. Through the persona of the brand ambassadors, the marketers derive the power to connect with the consumers and build brand loyalty. Realizing the brand power also calls for working on the product quality and continuous modification both in the product as well as in the promotion of brand ambassadors. Building and growing strong brand at a global level calls for the entire organization to be brand oriented. The best example of building and realizing strong brand power and unleashing the brand value is Apple. If you think that the entire world outside is an Apple fan, you are right. But the entire organization within also worship their brand too. All of the strategies, decisions as well as day to day business decisions at all levels are directed towards promotion of and strengthening of the apple brand. The entire organization believes in the brand and all business processes are driven to build the brand and deliver superior customer experience through the brand. Apple as a global brand is perhaps the best example of a successful corporate brand.

As much as the corporate strategy has got to account for the branding strategy, the marketing has also to ensure that they work on the different aspects of the brand packaging, design, etc and keep working on the brand so that it is consistent with the changing times, markets, consumer expectations and taste etc.

The brands have their own value. The market leadership and profitability of a certain product or business is realized through the brand value. Growing the brand power and using the brand value as a driver to increase profitability as well as the market calls for expert management of branding. Maintaining the leadership of a brand calls for strategic planning in the long term perspective.

Brand Value Measurement
Brands have a certain value in the market as well as in the balance sheets of the organization that owns the brand. This is a matter that has been agreed upon by the industry. The accounting of the brand value and the methodology for calculation of the brand value is widely debated. When organizations pay a huge premium or goodwill to acquire a brand, it becomes a strategic decision. However accounting for the premium paid is a matter that is discussed and debated by many in the industry.

No doubt accountants would like to assign a tangible value to every asset owned by the company and brand value paid to acquire a particular brand and the business is also considered to be an asset. One of the systems followed by UK based business organizations is that they capitalize the entire value paid for acquiring the business and the same is depreciated over a period of time.

Interbrand, the branding company has proposed a different method of accounting for the brand value. This method as well as the other methods that are proposed by industry experts take into account the future sales potential of the brand as well as its current market share to arrive at a definitive figure in terms of brand equity or brand power.

Accordingly one of the models followed by the industry accounts for the net profit earned by the brand in the last three consecutive years in terms of value. To this, is added a score that is derived out of measuring certain key factors associated with the brand like brand leadership, market share, trend, loyalty etc. Certain weight age is given to each of the factors and the total score is then converted into a certain value with the help of a multiple that is again derived out of a market study conducted for that particular sector.

Similarly there are several other models and methods that have been proposed by experts in the industry. All of the models use a combination of qualitative and quantitative factors to arrive at a measurable value in terms of Brand Equity. Some of the well known models are Brand Equity Index, Consumer Brand Equity Brand Asset by Longman Moran and Leo Burnett, Conversion Model Equity Monitor etc. The factors included in the above vary from Quality of the brand to Customer attitude, perception, market share, price band, durability etc.

A reasonable model to measure brand equity becomes essential not only for the accountants but for the business Organization that is looking out to buy a brand. Valuation of a brand and fixing the right price or premium for the brand needs a proven methodology and model that can guide the decision making. It is also true that one model cannot satisfy the finance and accounts personnel as well as the business managers, for each one’s perceptions and purpose of evaluation is different. When brands are key to the growth and business strategy of the Organizations, the decision makers would definitely need proven and strong models to guide them for decision making. Besides the models they would need to analyze the brand equity from many other points of view of product portfolio, growth potential of the brand to see if a particular brand is the right choice for them. If there exists a strategic synergy between the brand and the buyer’s business needs, then the brand value is likely to change and the buyer might find that he is required to pay a premium over and above the perceived brand value. At what price does it make sense to acquire the brand is a decision that is critical to the buyer. Brand value models can certainly aid him in this decision making process.

Brand Vision

Purpose of brand vision
To earn the right level of profitability, you have to leverage your brand rightly. It is here that we start treating brand as an asset and manage that asset by having a vision.
Vision fulfills three basic purposes

• Consensus among management
• Commits company to research
• Mandates telling all stakeholders

Strategic Brand Management

Mission
A mission statement speaks of the present form of business, the products it is dealing in, the customers it is serving, and the areas in which it is operating etc. In other words, a mission is all about achievement of present objectives.
It also talks of the commitments and values that are needed to let the company achieve its objectives. It does not speak beyond that. But, the process of strategic management does not stop there. It makes it imperative that managers see beyond the mission, or the present, to determine a long-term direction that the company must take for tomorrow. Nothing is static. The dynamism of the market necessitates that managers must see the impact of:

• changing technologies
• changing lifestyles
• changing needs of customers
• changing benchmarks of quality, and
• changing competition and overall conditions

Brand Challenges

If brands are strong and powerful, they also face challenges regarding sustenance and growth. These challenges vary in degree and intensity for various markets.
The basic determinant of challenges is the level to which a certain market is mature. Maturity holds the key. If a market is very mature, the challenges are intense; if a market is less mature, meaning still growing and robust, the challenges are less strong.
Markets become mature due to overall purchasing levels reaching a plateau. This simply implies that demand in the category is no longer elastic and has no further room to grow. And, the consumers are buying various brands in a certain pattern of frequency and quantities which are optimal and, hence, their buying behavior will not give further impetus to overall growth of the category. We can also call it maturity of the economic cycle.
Under the circumstances just explained, markets seem to lose vitality in terms of growth, but not in terms of availability of loads of products. This can be further simplified by saying that the size of the pie reaches the most optimal level from where it does not increase unless there is growth in population. Whatever changes take place they take place within the pie in the shape of competitive wars.
Competitive pressures and wars have led to a few difficult situations that companies have to face as challenges. The following are the typical ones:

Brand Manifestations / Fundamentals

To manage your brand as an asset, full of value and power, you must understand a few fundamentals that form the basis of brand asset management. Armed with that understanding, you, as brand managers, will do your job right only if you understand brands correctly.
The following four fundamentals will allow you to develop with ease and consistency the ability to build different strategic steps involved in creating a brand or refreshing an existing one.

• Dimensions
• Characteristics
• Levels
• Brand Owners’ 

Understanding Brands - Introduction

Brand management begins with having a thorough knowledge of the term “brand”. It includes developing a promise, making that promise and maintaining it. It means defining the brand, positioning the brand, and delivering the brand. Brand management is nothing but an art of creating and sustaining the brand. Branding makes customers committed to your business. A strong brand differentiates your products from the competitors. It gives a quality image to your business.
Brand management includes managing the tangible and intangible characteristics of brand. In case of product brands, the tangibles include the product itself, price, packaging, etc. While in case of service brands, the tangibles include the customers’ experience. The intangibles include emotional connections with the product / service.
Branding is assembling of various marketing mix medium into a whole so as to give you an identity. It is nothing but capturing your customers mind with your brand name. It gives an image of an experienced, huge and reliable business.

Clearing and Settlement

The Mechanism
Clearing system is a mechanism for calculating and determining each bank’s ‘payments / receipts’ position within the Commercial banks forming part of the system. A clearing system is governed by its rules which, among other things, include ‘timing’ for presentation and return of payment instruments.

Settlement is the transfer of value to discharge a payment obligation. Settlement may be within the branch or within the bank or among other banks. The first two being fairly easy, it is the last part of settlement that involves more banks and settlement is effected through the State Bank of Pakistan. Logistical help since the last few years is obtained from National Institutional Facilitation Technologies (NIFT).

Handling of Customers

Handling of Customers in certain circumstances.
During group discussions many people never speak up because they are afraid that people will judge them for saying something stupid. This fear is not really justified. Generally, people are much more accepting than we imagine. In fact most people are dealing with exactly the same fears. By making an effort to speak up at least once in every group discussion you will become a better public speaker. You will instill more confidence in your thoughts and will be recognized as a leader by your peers.

1. Handling of Customers in certain circumstances.
2. Powers of attorney / Mandate
3. Safe custody of customer’s valuables and lockers.

Handling of Customer Accounts in the following Circumstances.

1. Countermand of payment (Stop Payment of Cheque)
2. Notice of Customer’s death
3. Notice of adjudication of customer as an insolvent
4. Notice of customer’s insanity
5. Legal orders attaching customer’s account — A garnishee order 

{insolvent = a person who is unable to pay his debts as they arise.}

Opening accounts for various types of customers

Opening accounts for various types of customers
Opening of Account - Every adult and sane individual can open a bank account, provided he is not insolvent or an un-discharged bankrupt. Joint account can also be opened by two or more individuals. Similarly a group of persons having formed themselves into a ‘partnership firm’ can also open a ‘partnership account’, provided the maximum number of partners is twenty. Whenever the maximum number exceeds this limit, law requires that it should get itself incorporated as a joint stock company under the Companies Ordinance 1984.

A bank account is opened with an initial deposit of money generally in the form of cash. To this end an account opening form is used. The account opening form is required to be completed and signed by the prospective account holder and accepted by the branch Manager or an official duly authorized in this behalf. The completion and signing of the account opening form by the prospective customer and its subsequent acceptance by the bank and deposit of initial amount constitutes a contractual relationship between the account holder and the bank. 

Know your Customer and Anti Money Laundering (AML)

The only way your knowledge and vocabulary can grow is by looking up the meanings of all unfamiliar words in a good New Edition Dictionary. Specialized Dictionaries like the ones on (1) Law and (2) banking and finance can increase your understanding of technical terms and concepts.
Make a resolution that you will look up the words, whose meanings are not clear to you.

Know your Customer and Anti Money Laundering (AML)
(Story BCCI convicted of money laundering and liquidated world wide.)

What is Money Laundering?
Money laundering can be defined as the process whereby the true identity of illegally obtained money is changed or concealed so that it appears to have originated from a legitimate source.

Prudential Regulations for Banks

If the banks in Pakistan violate these Prudential Regulations they are liable to face heavy financial penalties and the bank officers can face disciplinary action by the State Bank of Pakistan and the bank can lose their banking licence besides heavy financial penalties.)

Nature of Prudential Regulations:
Prudential Regulations are both preventive and protective techniques. Preventive regulations forestall crises by reducing the risks facing banks such as controlling and monitoring the management of banks’ capital, solvency (CHECK THE MEANINGS OF SOLVENCY IN THE COMPUTER) and liquidity standards and large exposure limits. Protective techniques provide support to banks once a crisis threatens; lender-of-the-last-resort facilities are of immediate benefits.

In case of Pakistani banks branches functioning overseas the Prudential Regulations or legal requirements of host country shall prevail. The Prudential Regulations do not supersede other directives issued by SBP from time to time.

Literacy and Economic Development

Literacy and Economic Development

Economic prosperity of a country entirely depends on the economic resources it has. These economic resources are classified as Natural resources, financial resources and Human resources. Natural resources comprise of fertile land, ideal topography, abundant forests, sufficient mineral resources and excess water supply. Financial resources include the capital needed for the economic activities. Human resources include the population, its growth rate, skills, standard of living and working capacity of the labour force. According to modern economists a country leading in natural resources has more opportunities to develop than that of a country lacking in such resources. But only abundant availability of natural resources does not make sure the economic development of a country, these resources need to be utilized at their optimum. And this is only possible when efficient manpower utilizes these resources. The developed economy of Japan is the open example in this regard whereby Japan had overcome the deficiency of Natural resources by excelling in Human resources. In other words it can be said that economic development only occurs when Natural and Financial resources are maintained properly by efficient Human resources.

On the other hand if Human resources fail to maintain Natural and Financial resources, these resources may be misutilized, underutilized or unutilized and cause economic inefficiency, for instance underdeveloped countries of the world like Afghanistan has excess of mineral resources but the economy is not developed due to lack of Human resources. Another example is Pakistan, where we have sufficient mineral resources but due to lack of skilled manpower we cannot utilize all those resources, and as a result of such we are not in the queue of developed countries.

Good Governance

Good Governance

The concept of "governance" is not new. It is as old as human civilization. Simply put "governance" means: the process of decision-making and the process by which decisions are implemented (or not implemented). Governance can be used in several contexts such as corporate governance, international governance, national governance and local governance.

Since governance is the process of decision-making and the process by which decisions are implemented, an analysis of governance focuses on the formal and informal actors involved in decision-making and implementing the decisions made and the formal and informal structures that have been set in place to arrive at and implement the decision.

Government is one of the actors in governance. Other actors involved in governance vary depending on the level of government that is under discussion. In rural areas, for example, other actors may include influential land lords, associations of peasant farmers, cooperatives, NGOs, research institutes, religious leaders, finance institutions political parties, the military etc. The situation in urban areas is much more complex. Figure 1 provides the interconnections between actors involved in urban governance. At the national level, in addition to the above actors, media, lobbyists, international donors, multi-national corporations, etc. may play a role in decision-making or in influencing the decision-making process.

Humanism

Humanism

The exact time when the term Humanism was first adopted is still unknown. It is,however, certain that its roots are somewhere in Italy. Before going to the function of humanism i'd like to discuss the confusions and controversies related to this term. 

Because of the variety of meanings, and unclear descriptions of authors and speakers it can easily become a source of confusion, so lets classify the varieties of humanism first.

1. Literary Humanism is a devotion to the humanities or literary culture. 
2. Renaissance Humanism which deals with the learning and the ability of human beings to determine for themselves truth and falsehood. 
3. Cultural Humanism is the rational and empirical tradition that originated largely in ancient Greece and Rome, evolved throughout European history, and now constitutes a basic part of the Western approach to science, political theory, ethics, and law. 
4. Philosphical Humanism is any outlook or way of life centered on human need and interest. Philosophical humanism is further catagorized as Christian humanism and Modern Humanism.(I'll discuss Philosophical humanism in detail first then the other varieties of Humanism)

Islamic Fundamentalism

Islamic Fundamentalism

I Introduction: 

Islamic Fundamentalism, diverse political and social movements in Muslim countries of North Africa, the Middle East, and South Asia, which have as their goal national government based on the principles and values of Islam. Although these movements all seek to restore social justice based on sharia (Islamic law), they differ in the form of government they seek and in how strictly they believe the government should interpret the law.

For many people in the West, the term “Islamic fundamentalism” evokes images of hostage crises, embassies under siege, hijackings, and suicide bombers. But these images hardly present a comprehensive picture. The ranks of Islamic fundamentalists include Muslims who provide much-needed services to the poor through Islamic schools, medical clinics, social welfare agencies, and other institutions. While some Islamic militants try to reach their goals through violence, the majority of Islamic activists work through political parties within the electoral process. At the fringes are those like Saudi-born millionaire Osama bin Laden and his al-Qaeda network that engage in a global war of terrorism.

The reassertion of Islam and Islamic values in Muslim politics and society over the past 30 years is often referred to in the West as the rise of Islamic fundamentalism. However, the word fundamentalism, which originated in Christianity, can be misleading when it is used to describe Islam or Muslim countries. The conservative monarchy of Saudi Arabia, the radical socialist state of Libya, and clerically governed Iran have all been described as “fundamentalist,” but this description fails to take into account vast differences in their governments and policies. Political analysts prefer to use the expressions “political Islam” or “Islamism” when discussing Islam’s many-faceted roles in current social and political movements.

Democracy

Democracy

Introduction:-

Democracy is a tender topic for a writer: like motherhood and apple pie it is not to be criticized. One will risk being roundly condemned if he, or she, points out the serious bottleneck that is presented when a community attempts, through the democratic process, to set plans for positive social action. A man is not permitted to hesitate about its merits, without the suspicion of being a friend to tyranny, that is, of being a foe to mankind? 
The notions of government and of democracy are independent notions and do not, from what I can see, depend on one another. What is likely required for the masses of people, as we see in "modern" world societies, is an established system of government. Where there is a need for an established system of government, it will likely naturally come about; and do so, whether, or not, it has the consent of the people, -- real or imagined. Putting aside, for the moment, the arguments of Hobbes and Locke, I believe, on the basis of plain historical fact, that governments come about naturally and maintain themselves naturally without the general will of the people; indeed, I believe, with many others I suspect, that our long established democratic governments in the world (the United States and Canada being among them) did not come about by the general will of the people, at all; nor is it necessary that it should it be maintained by the will of the people. One should not conclude, therefore, that democracy is necessary for good government: It may not be. What is necessary for optimum prosperity is a state of acquiescence, which, as it happens, is the hallmark of western democracies. It may be, that the only thing needed is but the trappings of democracy. 

Alleviating Poverty

Alleviating Poverty

POVERTY is simply a state of human ill-being and unacceptable human deprivation. Its concept extends from low levels of incomes and consumption to lack of education and poor health. Different people view poverty in different perspectives. The worst kind of poverty is when people do not have access to basic food and water to fulfil their basic physical needs, therefore they are undernourished, weak and very susceptible to diseases. Another kind of poverty is where people have adequate food but do not have access to other basic needs, i-e: water for sanitation, public health services, clothes and housing. Poverty is not so simple that limits itself to food, cloth and housing. It includes other social dimensions like powerlessness, insecurity, vulnerability, isolation and social exclusion. The poors suffer from stunted growth due to malnutrition, diseases like diarrhoea which result from unsafe drinking water; and low level of schooling. They are not supplied with basic amenities like clean water and a place to live. They have no protection under the law. They are the most vulnerable to crimes. They are deprived of every security that a government provides to its citizens. They have been totally excluded from our societies just as they are not one of us.

Democracy is the best form of Government

Democracy is the best form of Government

Democracy is the government of the people, by the people, for the people.
Abraham Lincoln

Democracy is a form of government under which the power to alter the laws and structures of government lies, ultimately, with the citizenry. Under such a system, legislative decisions are made by the people themselves or by representatives who act through the consent of the people, as enforced by elections and the rule of law. 

Democracy is a tender topic for a writer: like motherhood and apple pie it is not to be criticized. One will risk being roundly condemned if he, or she, points out the serious bottleneck that is presented when a community attempts, through the democratic process, to set plans for positive social action. A man is not permitted to hesitate about its merits, without the suspicion of being a friend to tyranny, that is, of being a foe to mankind? 

Love is Life and Life is Love

Love is Life and Life is Love

Since the day I was born, I've been on this long, mystical journey through life. I'm still only a teenager, and have many a year to go, but I know I have a purpose in this home we call Earth. What would be the point in living if we didn't have a purpose? I know I have many, but I don't know them all clearly. Only through living life will I learn my clear purpose of being here. 

Everyone's purpose is distinctly different yet the same in many ways. Some seem to be decided already, yet just as many could be free-will. We are given the gift of free will, from whomever or whatever has created our living system. This gift gives us the ability to share the main purpose in life, to love and be loved. To me, this life is learning how to love everyone for who they are, and not what you want them to be. I do my best to love everybody, even the ones who have trouble returning it. The reason behind this is because I know there is good in the deepness of everyone. Just looking deep into a babies eyes, I'm ensured there is no bad-heartedness in there. The reason I feel we as humans can become evil-hearted is because of our lack of love in society, and many contributing factors such as materialism and lust. 

Banker Customer Relationship

What is a Banker: 
According to Section 3(b) Negotiable Instruments Act (Amendment) 1962 a "Banker means a person transacting the business of accepting, for the purpose of lending or investment, of deposits of money from public, repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise and includes any Post Office Saving Bank".
Banker has been defined in almost the same terms in section 5(b) of Banking Companies Ordinance 1962.

In simple words we can say banker is one who:

1. Takes deposits of money from the people, 
2. Repays these deposits to the people according to agreed terms and conditions including on demand, and 
3. Lends and/or invests these deposits in profitable ventures.

Who Is a Customer. The term customer has not so far been defined in any banking law, however, some eminent writers on banking and jurists have tried to define it. Sir John Paget says: "To constitute a person being called a “customer” there must be some recognisable course or habit of dealing in the nature of regular banking business". The most important point, according to Sir John Paget, was the sufficiently long "duration" of relationship between the banker and a customer, but it was ruled off by the judgement of Mr. Justice Bailhache in the case of Ladbroke v/s Todd (1914) who observed "the relationship of banker and customer begins as soon as the first cash deposit is accepted or a cheque is paid in and accepted for collection and not merely when it is paid".

Banking Laws And Regulations

Law constitutes the principles and regulations established in a country by some authority, applicable to its people, whether in the form of legislation or of customs and practices recognized and enforced by judicial decision. It is the implementation of social order and justice created by adherence to such a system. The system of judicial administration puts the laws of a community into effect, e.g. all citizens are equal before the law.

The banking business flourishes on the support and confidence of public because they contribute to the capital and deposits of money in the banks. This confidence is strengthened as and when the people find that their interests are being looked after properly by the government and it’s authorized regulatory agencies.

Banks and bank accounts are regulated by Federal statutory law. Banks are established in Pakistan under the Banking Companies Ordinance 1962, regulated by SBP through Prudential Regulations, and Exchange Control Manual. Bank accounts may be established by private and state-owned banks (National Bank of Pakistan) and National Savings centres. All are regulated by the Federal laws. Cheques and related matters (bearer, order, crossing, protection to the bankers, etc) are governed under the Negotiable Instruments Act 1881.

State Bank of Pakistan Act, 1956

This extends to the whole of Pakistan. It shall come into force at once and except Section 46, shall be deemed to have taken effect on and from the twelfth day of May, 1948.
Definitions: the definitions as contained in the Act are given hereunder:
"Annual general meeting" means the annual meeting of the shareholders-of the Bank;
"Approved foreign exchange" means currencies declared as such by any notification under Sec19;
"The Bank" means the State Bank of Pakistan;
"Bank Notes" means notes made and issued by the Bank in accordance with Section 24 and include currency notes of the Government of Pakistan issued  by the Bank;
“Central Board" means the Central Board of Directors of the Bank;
"Co-operative Bank" means a society registered under the Co-operative Societies       Act, 1912, or any other law for the time being in force in Pakistan relating to       co- operative societies, the primary object of which is to provide financial       accommodation to its members;
"Debentures" includes participation term certificates;
"Director" means a Director for the time being of the Central Board;
 "General meeting" means the meeting of the share-holders ' of the Bank convened for       transacting such       business as may be specified in the notice convening the meeting;
"Governor" and "Deputy Governors" means respectively the Governor and Deputy      Governors of the Bank;
"Loans and advances" includes finances provided on the basis of participation in profit  and loss, mark up in price, leasing, hire-purchase of otherwise;
"Local Board" means a Local Board of Members;
"Member" means a Member for the Local Board;
"Rupee coin" means one-rupee coin and one-rupee notes which are legal tender in        Pakistan;
"Scheduled bank" means a bank for the time being included in the list of banks       maintained under sub-section (1) of Section 37;
"Securities" includes securities as defined in the Capital Issues (Continuance of       Control) Act, 1947 (XXIX of 1947);
"Shares" includes modaraba certificates.
 
Establishment and incorporation of the Bank: Sec 3:
As soon as may be after the commencement of this Act steps shall be taken to establish, in accordance with the provisions of this Act, a bank to be called the State Bank of Pakistan or Bank Dautat-e-Pakistan, for the purposes of taking over, as from the first day of July, 1948, the management of the currency from the Reserve Bank of India, and carrying on the business of Central Banking.

Banking Companies Ordinance, 1962

Ombudsman Defined:

• According to International Bar Association, Ombudsman is defined as an “office” provided by the constitution or by an action of the legislature or parliament and headed by an independent, high level public official which is responsible to the legislature or parliament, who receives complaints from the aggrieved person, official, and employees or who acts on his own motion and has the power to investigate, recommend corrective action and issue reports.
• A man who investigates complaints and mediates fair settlements, especially between aggrieved parties such as consumers or students and an institution or organization.
• A government official, especially in Scandinavian countries, who investigates citizens' complaints against the government or its functionaries.

Evolution
In the modern world, an ombudsman was first established in 1809 in Sweden. The word “ombudsman” is of Swedish origin and means “representative or agent” of the people. In 1919, more than a century after Sweden appointed an ombudsman, another Scandinavian country, Finland, adopted the Swedish model for the redressal of public grievances against agencies of state. The next country to follow was Denmark - this happened more recently in 1955. The first country outside Europe to establish such an office was New Zealand. This was in 1962 and generated tremendous global interest inspiring many countries, in search of good governance, to launch such schemes. Today, over 100 countries have such a platform in place. In 1995, the European Union established the first European Ombudsman under the Maastricht Treaty.

The Banks (Nationalization) Act, 1974

Nationalization of Banks 
We have gone through the evolutionary process of banking in Pakistan. We know that by June 30th 1948 the number of branches in Pakistan was only eighty one. However with the establishment of State Bank of Pakistan and efforts of the government, the number of schedule bank increased to 14 with 3323 branches all over Pakistan and also 74 branches in foreign countries by Dec 31st 1973. The commercial banks grew at tremendous speed and mobilized savings from the public and also contributed a lot in financing business and corporate sector. However it was considered that although banking sector was growing but the fruits of development were limited only to the urban population and corporate sector whereas most of the sectors, people and under develop regions were not getting due share. As such it was decided that banks should be nationalized.  For the implementation of this objective Nationalization Act 1974 was promulgated.

Objectives of Nationalization
The nationalization was carried out with a view to achieve the following objectives:
-- Disbursement of funds to the desired channels to achieve the priorities set out by the government for social welfare projects. 
-- Equitable distribution of credit to different classes, sectors and regions.

 Salient features of The Bank (Nationalization) Act, 1974
The Act extends to the whole of Pakistan. 
Act to override other laws.- This Act shall have effect not withstanding anything contained in any other law for the time being in force or in any agreement, contract, award memorandum or articles of association or other instrument.

Evolution of Banking

Historical Overview of Banking     
 Before we move on to evolution of banking in Pakistan, it would be quite interesting to have a glimpse of historical evolution of banking over a period of time.
 Today, we look around us chain of banks rendering host of services to their customers. These banks cater to the commercial and industrial needs of all countries which include die highly developed and industrialized countries, the less developed countries and the countries which are at the take-off stage. Thus there are the industrial banks, the commercial banks, the joint stock banks, the co-operative banks, the agricultural banks, rural development banks, lead banks and so many other types of banks and credit institutions which are functioning. They not only meet the requirements on a national basis, but also on an international basis and what may be called as an ever expanding advancement in banking. The Banks now-a-days are performing so many functions that it would not be a misnomer to suggest that they have become the custodian of the monetary economies of the world.  When we talk of great scientific developments and inventions, banking as it stands today is also a wonder of the world.

Financial Instruments & Banking Law & Practices

Financial Instruments
We have discussed financial system and financial institutions, now shall move on to financial instruments. Financial instruments are the vehicles by which financial markets channel funds from savers to borrowers and provide returns to savers. We shall discuss major instruments or securities, traded in the financial sys­tem. For convenience, we analyze money market and capital market instru­ments separately. Both money market and capital market assets are actively traded in financial markets.

Money Market Instruments
The short maturity of money market assets doesn't allow much time for their returns to vary. Therefore these instruments are safe investments for short-term surplus funds of households and firms. However, ill making investment decisions, savers must still consider the possibility of default—the chance that the borrower will be unable to repay the entire amount borrowed plus interest at maturity.

Financial System & Banking

Financial System
Complete and complex ever changing set of rules, regulations, procedures, practices policies, conducts; role of institutions (financial institution), Governments, Policy makers and central bank taken together may be called financial system.
 The financial system does have its impacts on individuals, businesses, corporations and governments alike. At times in your life, you will be a saver and at other times, you may be a borrower.  The financial system channels funds from savers to borrowers and makes it possible for both to achieve their objectives. When the financial system works efficiently, it leads to better health of the economy.

Purpose of the financial system
Most of us at one time or another may need more funds than you have on hand for one purpose or another.  At the same time, others spend Jess than their incomes.  Those who have surplus funds may be willing to let someone else use their savings if they are compensated for doing so.
The mismatch of income and spending for individuals and organizations / creates an opportunity to trade. The investor can use the funds saved by different classes of people. The investor would be better off by earning a profit from investing funds in a new venture and savers who have lent their money would be better off 'by receiving the return that the investor pays them for lending their funds.